Earn Huge Returns from Property Investments

Friday, 30 September 2016

Estate investing can be an everyday learning experience for both novice and successful property investors. What matters really is that if you want to deal in the property market and build a property portfolio you would need to buy properties sensibly and well researched. To get firsthand experience in real estate investing you could start by working with a property investment company. This is how many property investors have started their property portfolios.

Financing your Property Investment

This aspect of the property investment is being discussed first as it is the most important criteria. It is important that you work with right bunch of professionals who can help you arrange the best balance of finances. It is the first piece of the puzzle and there are a number of professionals that would help you. These professionals are financial advisers; mortgage brokers and finance experts who can help you get some of the best deals on your financial requirements. Ensuring you finance your property the right way is the very first crucial step towards a successful return on your endeavor.

Join a Property Investment Club

If you are good at residential property investments and would like to increase your profits then property clubs are quite lucrative. This would provide you with the opportunity to interact with other successful property investors and help you learn much more about the property investment market. Over a period of time you will network with some heavy-duty investors at the property investment seminars that are held by such clubs.

Why they help?

The members of such clubs have plenty of experience in real estate consulting and some of these people invest in overseas real estate. Besides learning about property investment locally, you will also become skilled at making international property investments. Some of the opportunities that you may get can be some of the best property investments you may ever make.

Being a Part of Property Management Companies

If you are not satisfied with the property investment appraisal that investment clubs offer, you can also try your hand at property management companies. The advantage that you will have with such companies is that besides the usual property investing they are also into rental real estate investing. The rental property business is very profitable but carries a fair amount of risk. The rental property investment involves both residential and commercial real estate investing.

What Else?

Residential income property concerns profits by leasing apartments and flipping real estate by using off-plan property investments. If you want to make money by flipping real estate you must have a sound financial plan so that the investment deals can be closed quickly. You would need to have strong knowledge about the real estate market and find sellers that are in a rush to make a sale. Once you close the property deal, you would have to market the property correctly so that you make a sale with a sizeable profit.

Wednesday, 7 September 2016

Investing in real estate is as advantageous and as attractive as investing in the stock market. I would say it has three times more prospects of making money than any other business. But, But, But... since, it is equally guided by the market forces; you cannot undermine the constant risks involved in the real estate. Let me begin discussing with you the advantages of real estate investments. I found the advantages as most suited and really practical.

Advantages:-

Real Estate Investments are Less Risky

As compared to other investments, less of misadventure is involved in a real estate property. I will not get away from the fact that just like any investment you make; you have the risk of losing it. Real estate investments are traditionally considered a stable and rich gainer, provided if one takes it seriously and with full sagacity. The reasons for the real estate investments becoming less risky adventure primarily relate to various socio-economic factors, location, market behavior, the population density of an area; mortgage interest rate stability; good history of land appreciation, less of inflation and many more. As a rule of thumb, if you have a geographical area where there are plenty of resources available and low stable mortgage rates, you have good reason for investing in the real estate market of such a region. On the contrary, if you have the condo in a place, which is burgeoning under the high inflation, it is far-fetched to even think of investing in its real estate market.

No Need for Huge Starting Capital

A real estate property in Canada can be procured for an initial amount as low as $8,000 to $ 15,000, and the remaining amount can be taken on holding the property as security. This is what you call High Ratio Financing. If you don't have the idea as to how it works, then let me explain you with the help of an example. Remember that saying... Examples are better than percepts!

Supposing, you buy a condo worth $200,000, then you have to just pay the initial capital amount say 10% of $200,000. The remaining amount (which is 90%) can be financed, against your condo. It means that in a High Ratio financing, the ratio between the debt (here in the example it is 90% Mortgage) and the equity (here in the example it is 10% down payment) is very high. It is also important to calculate high ratio mortgage insurance with the help of Canada Mortgage and Housing Corporation (CMHC). If needed, you can also purchase the condo on 100% mortgage price.

Honing Investment Skills

A real estate investment, especially when you buy a condo for yourself, will be a pleasurable learning experience. It gives you the opportunity to learn and when I went ahead with my first real estate property, I was totally a dump man. Ask me now, and I can tell you everything, from A to Z. Necessity is the mother of all inventions. I had the necessity to buy the property and so I tried with it, and I was successful. I acquired all the knowledge and skills through experience of selling and purchasing the residential property. Thanks to my job. It gave me the experience to become an investor.

Not a time taking Adventure

Real estate investment will not take out all your energies, until you are prepared and foresighted to take the adventure in full swing. You can save hell lot of time, if you are vigilant enough to know the techniques of making a judicious investment in the right time and when there are good market conditions prevailing at that point of time.

You should be prepared to time yourself. Take some time out, and do market research. Initiate small adventures that involve negotiating real estate deals, buying a property, managing it and then selling it off. Calculate the time invested in your real estate negotiation. If the time was less than the optimum time, you have done it right. And if you end up investing more time, then you need to work it out again, and make some real correction for consummating next deals. You have various ways and methodologies, called the Real Estate Strategies that can make it happen for you in the right manner.

Leverage is the Right Way

The concept of leverage in real estate is not a new one. It implies investing a part of your money and borrowing the rest from other sources, like banks, investment companies, finance companies, or other people's money (OPM). There have been many instances where people have become rich by practically applying OPM Leverage Principal. As I had discussed under the sub head - No Need for Huge Starting Capital, the high ratio financing scheme gives an opportunity of no risk to the lenders, as the property becomes the security. Moreover, in case the lender is interested in selling the property, the net proceeds resulting from the sale of the property should comfortably cover the mortgage amount.

Now consider a situation, where the lender leverages the property at too high ratio debt say 98% or even more, and all of the sudden the market shows a down turn, then both the investor as well as the lender. Hence, greater is the mortgage debt, more is the lender's risk, and it is therefore necessary that lender pays higher interest rates. The only way out to ease the risk from lender's head is to get the mortgage insured.

Letme explain you with the help of an example... supposing, you are buying a real estate property worth $ 200,000 at three mortgages, with the first one of $100,000, the second of $75,000 and the third one of $25,000. Possible percentage of interest rates charged can be 3%, 5% and 7%. The last mortgage amount of $25,000 will be accounted, as riskiest; as it would relatively be the last mortgage that you will pay when you finally make a selling deal.

On the contrary, if the first mortgage representing almost 90% of your property price is insured against getting default or as high ratio mortgage, then in the above example, the basic interest rate would be 3%.

Let me explain you the leveraging concept by taking another example.

Supposing, you are buying a real estate property worth $200,000, and made down payment of 10%, equitable to $20,000, while financed the rest amount of $1,80,000. Over the year's time, the value of your property appreciates by 10%. In this case, what would be the total return that you'd incur on your down payment of $20,000? It would be 200%. Yes 200%. Putting in simpler words, the down payment of $20,000 made by you has an appreciation of 10% over it, i.e. (10% increase of original home price of $ 200,000), 200% return on your down payment investment of $20,000.

On the contrary if you invest all the money in buying the property of $200,000, and in wake of appreciation of 10% over the year ($20,0000 would then be accrued to as 20%.

Synonymous with leveraging is pyramiding, where you borrow on the appreciated value of your existing property. Pyramiding applies the principal of leverage that enables you to purchase even more properties. This appreciated value over the real estate property in some selected areas results in accumulation of rich financial virtues.

Real Estate Appreciation

An appreciation is an average increase in the property value over original capital investment, taking place over a period. There are some neglected real estate properties that have an appreciation below the average mark, whereas, some of the properties located in maintained geographical areas, showing high demand, have an above average appreciation. In such centrally located and high demand areas, the average appreciation can reach up to 25% in a year. I will discuss appreciation in the chapter on real estate cycles. For now, for general understanding, appreciation is what goes up.

You Make Your Equity

As you gradually pay your mortgage debts, you are creating your equity. In other words, you would be reaching to original house price on which you have no debt. Your equity is absolutely free of percentage increase in appreciation. From the investor's perspective, in real estate market, equity is the amount that is free of debt and it is the amount that an investor holds. When you sale your property, then the net money you get, after paying all the commissions and closing costs, becomes your equity. Lenders don't want to take risk by allowing a loan on over 90% of equity. Therefore, in this manner, the lenders take the safety measures in wake of their loan being defaulted.

The Federal Bankruptcy act says that all the first mortgages of over 75% of the appraised or purchase value must be covered under high-ratio insurance schemes. However, there are certain conditions, wherein, CMHC offers the purchasers of real estate property qualifying the insurance, a mortgage of up to 100% of purchase price over your principal house value. In the wake of an event where borrowers want more money from the lenders, they would ideally settle for second and the third mortgages.

Low Inflation

Inflation is the rise in the prices of the products, commodities and services, or putting it another way, it is the decrease in your capacity to buy or hire the services. Supposing, a commodity was worth $10 a decade back, will now cost $ 100 as the result of inflation. For people who have fixed salaries feel the real brunt of the dollar, as the inflation rises. In Canada, the inflation rate varies and it varies every year. There was a time when Canada had a double-digit, but it was controlled to single digit, after the regulation of policy.

If we analyze closely, the land appreciation value for the residential real estate is 4% to 5% higher than inflation rate. Therefore, when you invest in real estate, then you are paying mortgage debts in high dollar value. Now as you are getting more, salary to pay less amount than the amount that you had paid in the original mortgage.

Tax Exemptions

You get various tax exemptions on your principal and investment income property. The tax exemptions available in real estate property investment are more than available in any other investment. In other investments, you lose terribly on the investments in your bank in the form of inflation and high taxes therein, but in real estate; you don't actually have such hindrances.

Various tax exemptions available are:
•The interest receivable from your bank account, term deposit or guaranteed Investment Certificate (GIC) is completely taxable as income. A little math here will do the magic work for you. Supposing, if you get an interest of 8% on the deposit, and the on going inflation rate is 5%, the Real Return Rate will come out to be settled at 2%.
•You get completely tax-free capital gain on principal amount of your residential real estate property.
•You have the opportunity to ward off principal amount of your residential real estate property against the home expenses incurred by you.
•You can easily ward off the property depreciation against your income.
•You can cut the expenses incurred in real estate property investment through your income
•Tax rate reduced to approx. 50% of the capital gain.
•And many more

Net Positive and High Income is Generated

If taken in right direction and played seriously, a real estate investment can be your virtue making endeavor now and in times to come. You will not only be having additional assets building in your favor, but also with positive cash flow, your real estate property value will increase automatically.

High Return on Investments (ROIs)

Real estate investment gives you potentially high ROIs before and after the taxes levied on your income. In fact, investing in real estate gives you high ROIs after the taxes.

Demand for the Real Estate Increases

As a natural instance, when the population of a region increases, the total usable land decreases, and this provides the impetus for high real estate prices. There are many communities that can or cannot have growth and development regulations, thereby, resulting in limited land available for use. Therefore, the real estate prices of the area shoot up. Remember housing is the necessity of an individual and therefore it is much in demand than any other single commodity taken. Furthermore, there are people who purchase additional houses for their recreation, recluse or as a past time. This in turn increases the demand for land.

Thursday, 1 September 2016

If you want to make a successful and highly profitable real estate investment, there are some key factors that you should consider before choosing an investment property. We have compiled this Property Investment Checklist to provide you with a short but essential summary of key factors you should pay attention to.

1. Have you chosen a reliable and professional property investment agency? If you are investing through a property investment company or property agents, you will have to make sure that you can fully trust them. Check the company's track record, ask to see client testimonials, and try to contact former clients. Ensuring that you are using the right property investment company will give you peace of mind and is essential for a successful property investment.

2. Do you understand the basics of property investment and current market conditions? While you should use professionals, solicitors, or real estate agents during the investment process, you cannot entirely rely on them. Make sure that you understand the basics of property investment and all financial details involved. This will enable you to spot any potential risks ahead of time and to find a profitable investment opportunity and a good location.

3. Do you have a clear picture of what type of investment property to buy? There are a variety of investment properties, such as buy to let properties, BMV properties, off-plan properties or overseas properties. The type of real estate will also determine your investment strategy, so make sure that you know what kind of property and investment strategy you are looking for to achieve your desired profits.

4. Is the property in good condition and is it in a good location? These should be crucial considerations, as you will either want to let the property, or sell it to another property investor or home-buyer. A property that is in good condition might be more expensive, but buying a relatively cheap property in a bad condition will always incur significant additional repair costs. Whether you want to find tenants, or resell the property, the location will be crucial, and a property in a bad neighbourhood or in an economically unstable location will rarely turn out to be a good investment.

5. Will you find tenants for your property? When investing in a buy to let rental property, the tenants will form the basis of your investment bringing you profit, so it is essential to make sure that you can find tenants for your property. This will depend on the location, property condition, the rent, and many other factors. Some property investment companies will even help place tenants in the investment property.

6. Do you understand how to maximise your returns? Achieving a positive cash flow will make your property investment successful. While it is obvious that every investor wants to maximise returns, you will have to understand how to make this happen. Finding a property possibly below market value but in a good location and good condition will be crucial for the success of your investment. You will also have to understand how to minimise the costs, including repairs, and taxes, and you should also make sure that the property remains let for most of the year.

7. Do you understand the risks? Property investment will never be without its risks, and you will thus need to understand all the risks involved. Economic growth might not be as expected, or you might not find tenants for a longer period. By understanding these risks, and developing an effective risk-mitigation strategy, you will find it easier to turn your property into a successful investment.

Wednesday, 24 August 2016

So you are new to buying investment property and you need to know about investment property loans. Borrowing money to invest in property can be a very tricky business and it is a good idea to research your field before committing yourself to a huge loan. One way of doing this is to get advice from the people who have already dealt with investment property loans and who are happy to advise new entrants into the property market.

That's all very well, I hear you say, but I am looking at buying investment property and I have no idea where to look for advice. The only place that most people go for advice on investment property loans is their bank, who already have a vested interest in loaning the money. One way of getting independent advice on this subject is to check out a property investment forum. There are ones that really are worth a look. A lot of the people on there have been buying investment property for some time and are well aware of both the pitfalls and advantages surrounding investment property loans. The property investment forum, in fact, is worth a visit for anything to do with the property investment market. The way the market is at the moment there are people around who are dedicated to maximising the property investment market to attract new entrants.

This is a double edged sword, on the one hand it is great news for those who are well informed when it comes to buying investment property or dealing with investment property loans, but those who don't do their homework stand to lose a great deal of money. This is in addition to all the heartache and hard work that is associated with investing in the property market.

Despite the sometimes problematic nature of the property market you are already a good way towards buying investment property. You've gone to the auctions, perhaps bid more than you should, and you are now beginning to wonder whether your finances will cover the mortgage and the work that needs to be done. Somebody has suggested to you that you get yourself a bridging loan or investment property loan and you are not really sure what they are or how to go about it. Not to worry you will find plenty of useful advice at the property investment forum. These people have experience in buying investment property and more than a few of them have had bridging loans or property investment loans so it's worth having a look at what they have to say and taking their advice. You need to be aware of the different property types and their usage, although most beginners will start with a residential property.

There is a lot of advice out there in the form of articles like this and on the property investment forum, do your research well. Try to understand the market and if you have a property investment loan get the best rate that you can. This way you stand more chance of success in the property investment market.

Wednesday, 17 August 2016

If you happen to watch cable or satellite television on the weekends, you can find between 20 and 30 channels early in the day with get rich quick infomercials hawking everything from books, tapes, seminars and even personal coaching services. Most are centered around real estate and I am not sure they are worth the time it would take you to order them by phone. I have spent thousands of dollars on real estate home study courses through the years and will continue into the future. I am always looking to further my education and understanding of what is really working in the investment real estate world.

Because of the time, energy and dollars that I have spent in the past, I have a pretty good idea of what a real estate investor wants to avoid as well as the best steps to take for a successful start. Education definitely plays a role in the success of a real estate investor as well as business savvy, attitude and at times, luck!

Here are a few detailed steps that an investor can take to improve the chances for success.

- Learn the basics of real estate in general.

As with any investment strategy or business, real estate comes with its' very own lingo. There are terms and phrases that many of us have heard in the past, yet may not know the exact meaning. It is very important from the get go to do the research and learn the basics such as the meaning of the terms and phrases that are used in the real estate industry every day. You can start by using a search engine and searching the phrase "real estate definitions".

- Begin home study education.

There are great benefits to home study and I do not mean the courses we eluded to on weekend cable T.V. At your local library, in the real estate investing section, there will be multiple titles recently written by authors with experience in their topic. Check out as many titles as you can read in a week and o to work reading. Write down sentences and topics that come up in the books that interest you and that fit into your reasoning for starting to invest in real estate. This will be the start of your plan for getting started.

- Develop a game plan.

By this point, you have an idea of the general terms and phrases for the property investing world and have begun to grow your interest and understanding of the specific strategies for real estate investing. It is time to formally develop your plan and start taking action. Each of the real estate investing books that you will be reading give specific advice about team building. It is a crucial step for your success and the best books offer advice about who to put on your team, where to find them and how important they are to your over-all success. Before you can start investing, you must have a plan for where you are going and how you are going to get there.

- Join local organizations for investors.

In every city, county and state there are multiple organizations whose missions are to assist real estate investors. Each of these organizations holds monthly meetings and some of the best even hold weekly meetings, where investors can network and learn. These meetings are crucial to a beginner investor because they offer the opportunity to build your team with experienced members. They also are fantastic groups to attend for tips, tricks and education. Join a group close to you and make your attendance mandatory. Attend as many meetings as possible each month. Often times, the simple step of surrounding yourself with like-minded individuals who are positive and re-enforce your determination to succeed, can have the biggest benefit on your future success.

- Find partners & Do not fall for get rich quick!

One mistake that is easy to make in the beginning is to set off on the path of "go it alone". Another is to believe that just around the corner is a pot of gold if I can just find a deal like those guys on T.V.! One thing that is seldom talked about is the fact that most real estate investors have used partnerships in the past if they are not using them now. Partnerships are a great way to spread the risk of investing while learning the ropes. Those risks include using less of your available capital, credit and time. Partnerships can also be structured to be a simple 50/50 partnership splitting all costs and profits or a slightly more complicated partnership with one partner providing money and the other providing the deals, follow through and managing the investments. Either way, going it alone can be a lonely, long and expensive way to get started investing.

- Do not quit your day job!

This is a biggie and is a MAJOR mistake made by some first time real estate investors. Investing in real estate requires a total commitment - a "burning of the boats" mentality. There is no turning back when you decide to go all in. And in that statement lies the problem with leaving your day job first. Take time to develop your team, to build cash reserves, to learn the ropes. Take time to make small mistakes before you leave your full time employment and make a big mistake! Investing in real estate is a big picture endeavor and as an investor you have to be able to clearly see your future and plan accordingly.

These last two tips really go to the heart of why some investors not only fail, but fail miserably. Many times you can overcome the mistakes with the first few tips here by perseverance and a little luck. If you make one of the following two mistakes, they can quickly break a new investor and sour the experience for a good long time. Then again, if you follow all the previous tips, chances are you will have the team around you to guide you right past these last two tips and onto smooth investing.

- Once started, DO NOT under estimate repairs.

When you are estimating the repairs to a property for investment, unless you have an experienced contractor and trusted advisor on your team, you can miss the mark wildly. Even the best home study courses are not able to provide you with an accurate ability to estimate costs. It takes experience and time before you can accurately guesstimate repair costs. Missing the mark on estimated repairs can quickly break a bank account and take a property from profitable to money pit quickly!

- Do not purchase investment property for equity or appreciation

There is no bigger mistake an real estate investor can make today than to purchase property for its equity holding or future appreciation. Long-term investing today is centered around the ability of a property to perform with a positive monthly cash flow. In my home city for investing, Memphis, real estate investors purchase properties at extreme discounts, but over look those discounts if the property does not provide a high enough monthly cash flow. Equity and expectations of future home values are not good reasons to purchase investment property.

Many individuals will purchase their first investment property in 2010. Some will view their purchase as strictly an investment and others will look for real estate to provide a new profession. Either way, it is extremely important that first-time investors seek all of the help, advice and experience they can get from other investors.

Sunday, 7 August 2016

Here are three simple guidelines that must be followed if
you plan to succeed at real estate investing. It's not everything, of course,
but at the very least, you must be willing to commit to these things if you
want to become a successful real estate investor.

Shall we get started?

Acknowledge the
Basics

Real estate investing involves acquisition, holding, and
sale of rights in real property with the expectation of using cash inflows for
potential future cash outflows and thereby generating a favorable rate of
return on that investment.

More advantageous then stock investments (which usually
require more investor equity) real estate investments offer the advantage to
leverage a real estate property heavily. In other words, with an investment in
real estate, you can use other people's money to magnify your rate of return
and control a much larger investment than would be possible otherwise.
Moreover, with rental property, you can virtually use other people's money to
pay off your loan.

But aside from leverage, real estate investing provides
other benefits to investors such as yields from annual after-tax cash flows,
equity buildup through appreciation of the asset, and cash flow after tax upon
sale. Plus, non-monetary returns such as pride of ownership, the security that
you control ownership, and portfolio diversification.

Of course, capital is required, there are risks associated
with investing in real estate, and real estate investment property can be
management-intensive. Nonetheless, real estate investing is a source of wealth,
and that should be enough motivation for us to want to get better at it.

Understand the
Elements of Return

Real estate is not purchased, held, or sold on emotion. Real
estate investing is not a love affair; it's about a return on investment. As
such, prudent real estate investors always consider these four basic elements
of return to determine the potential benefits of purchasing, holding on to, or
selling an income property investment.

1. Cash Flow - The amount of money that comes in from rents
and other income less what goes out for operating expenses and debt service
(loan payment) determines a property's cash flow. Furthermore, real estate
investing is all about the investment property's cash flow. You're purchasing a
rental property's income stream, so be sure that the numbers you rely on later
to calculate cash flow are truthful and correct.

2. Appreciation - This is the growth in value of a property
over time, or future selling price minus original purchase price. The
fundamental truth to understand about appreciation, however, is that real
estate investors buy the income stream of investment property. It stands to
reason, therefore, that the more income you can sell, the more you can expect
your property to be worth. In other words, make a determination about the
likelihood of an increase in income and throw it into your decision-making.

3. Loan Amortization - This means a periodic reduction of
the loan over time leading to increased equity. Because lenders evaluate rental
property based on income stream, when buying multifamily property, present
lenders with clear and concise cash flow reports. Properties with income and
expenses represented accurately to the lender increase the chances the investor
will obtain a favorable financing.

4. Tax Shelter - This signifies a legal way to use real
estate investment property to reduce annual or ultimate income taxes. No
one-size-fits-all, though, and the prudent real estate investor should check
with a tax expert to be sure what the current tax laws are for the investor in
any particular year.

Do Your Homework

1. Form the correct attitude. Dispel the thought that
investing in rental properties is like buying a home and develop the attitude
that real estate investing is business. Look beyond curb appeal, exciting
amenities, and desirable floor plans unless they contribute to the income.
Focus on the numbers. "Only women are beautiful," an investor once
told me. "What are the numbers?"

2. Develop a real estate investment goal with meaningful
objectives. Have a plan with stated goals that best frames your investment
strategy; it's one of the most important elements of successful investing. What
do you want to achieve? By when do you want to achieve it? How much cash are
you willing to invest comfortably, and what rate of return are you hoping to
generate?

3. Research your market. Understanding as much as possible
about the conditions of the real estate market surrounding the rental property
you want to purchase is a necessary and prudent approach to real estate
investing. Learn about property values, rents, and occupancy rates in your
local area. You can turn to a qualified real estate professional or speak with
the county tax assessor.

4. Learn the terms and returns and how to compute them. Get
familiar with the nuances of real estate investing and learn the terms,
formulas, and calculations. There are sites online that provide free
information.

5. Consider investing in real estate investment software.
Having the ability to create your own rental property analysis gives you more
control about how the cash flow numbers are presented and a better
understanding about a property's profitability. There are software providers
online.

6. Create a relationship with a real estate professional
that knows the local real estate market and understands rental property. It
won't advance your investment objectives to spend time with an agent unless
that person knows about investment property and is adequately prepared to help
you correctly procure it. Work with a real estate investment specialist.

There you have it. As concise an insight into real estate
investing as I could provide without boring you to death. Just take them to
heart with a dash of common sense and you'll do just fine. Here's to your
investing success.

Sunday, 31 July 2016

I consider why you should start real estate investing now rather than later and then follow it up with a few suggestions to help you get started.

The proverbial saying "time is money" is true in real estate investing. Due to a phenomenon known as compounding, money grows faster and faster as time goes by. So the sooner you put your money to work in a real estate investment, over time the more money you will accumulate.

Say, for example, that you start investing $1,000 a year into real estate for the next forty years. At a 9% annual rate of return, your $40,000 cash investment (thanks to compounding) will grow to over $369,000. Whereas, if you wait ten years before you make that investment, that same amount only grows to about $150,000.

In the same way, the longer you wait to get started real estate investing, the less time you have to combine the factors of time and compounding interest, and hence (assuming all things equal) the less wealth you can expect to accumulate as a result.

Say your goal is to retire at age sixty-five. Because of compounding, you stand a far better chance of achieving more wealth by retirement if you start investing at age twenty-five rather then at thirty-five, or forty-five, and so on.

How to Get Started Real Estate Investing?

Develop a plan - How much can you invest comfortably? Are you expecting cash flow or merely looking to make your money when the property is resold? How long do you plan to own the property? What amount of your own effort can you afford to contribute? What amount of wealth do you plan to accumulate, and by when?

Acquaint yourself with the local rental market - Read the local newspapers and see what types of income property have the highest demand for tenants. If there are tons of classifieds seeking apartment tenants, perhaps retail space is more in demand, and vice versa. In other words, learn what product would be best for you to invest in.

Acquaint yourself with the rates of return - At the very least understand the difference between cash and cash return, return on equity, and cap rate. Whereas cash on cash might show what your cash investment might achieve in one year, and return on equity over future years, cap rate helps you choose a property at a fair market value.

Invest in real estate investment software - It is never a good idea to rely on someone else's numbers. It's your money. Always run your own numbers on potential investment opportunities. Having the ability to create your own rental property analysis gives you more control about how the cash flow numbers are presented and a better understanding about a property's profitability.

Create a relationship with a real estate professional that knows the local real estate market and understands rental property. A qualified real estate professional acquainted with your market can be a real plus. It will not advance your investment objectives to spend time with the agent of the year unless that person knows about investment property and is adequately prepared to help you correctly procure it.

Avoid buying into real estate investing "trade secrets". Tons of real estate investing gurus out there repackage and sell the exact same material as the next guru. The sizzle in the business of real estate investing, however, is about owning a piece of ground that, if unduly researched and purchased sensibly by impartial numbers, with careful management, will likely be more valuable tomorrow than it is today.

How Much Do You Need to Get Started?
There's no set amount to start real estate investing. You could start out very small and then as you begin to earn more, start contributing more. Start perhaps with 2% of your income and then add a percentage point more each year to your contribution.

The important thing is to start real estate investing now, while "time is on your side" and you can in fact take advantage of a favorable real estate market and compounding interest over the passage of time to achieve your retirement goal.